A mutual fund is merely a company that pools together the amount of money of varied investors for the objective of making many different of investments. This collection of investments-which can be comprised of stocks, bonds, and money market funds-is known as the portfolio.
The responsibility for managing mutual funds is assigned to an expert investment manager, whose sole function is to buy and sell securities with the goal กองทุนบัวหลวง of increasing the fund in the very best manner possible. Investors in a mutual fund basically become shareholders of the mutual fund company. Obviously, the state of the mutual fund directly affects each individual investor. When the mutual fund profits, investors earn a dividend. When the mutual fund suffers a loss, the value of the investor’s shares will decrease.
Mutual funds are, by nature, diversified forms of investments. What this simply means is that they are made up of many different investments. The implication with this for the investor is they can avoid having all their eggs in one single basket so to speak. And there is generally a reduced risk involved.
It’s obviously the responsibility of the fund manager to ensure that the mutual fund performs along with it possibly could. This really is after all what the investor’s are paying him or her for. With the fund manager’s income based on how effectively he or she can raise the fund, it’s in their best interests to ensure that it performs well.
Because investors assign the work of managing the fund to somebody else, they cannot have to bother with diversifying the investments themselves or even keeping their very own records. In most cases, investors can simply buy stocks and forget about them. Of course since it’s your hard earned money that is at stake, you will want to be informed in regards to the status of one’s investments from time for you to time.
Mutual funds fall into three main types:
Equity funds – They are made up of investments of common stock. These generally earn more cash than other kinds, although they might be riskier.
Fixed-income funds – They are government and corporate securities that offer a fixed rate of return. They are generally pretty low risk investments.
Balanced funds – These investments are comprised of both stocks and bonds and they’re generally mid- to low-risk.
While low risk investments may seem like a good idea-and they in reality are-they may also offer a lower rate of return. It is very important therefore to decide what risk-to-return ratio you are most more comfortable with, and make your investments accordingly. Careful research is type in getting a mutual fund that gives the degree of risk you are prepared to take and the returns that you want.